DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.
Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."
Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
Gentherm (THRM) designs, develops and manufactures thermal management technologies and cable systems worldwide. This stock closed up 5.3% at $44.10 in Friday's trading session.
Friday's Volume: 1.43 million
Three-Month Average Volume: 643,726
Volume % Change: 134%
From a technical perspective, THRM spiked sharply higher here right above some near-term support at $41.31 and back above its 50-day moving average of $44.04 with above-average volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $22.84 to its recent high of $49.23. During that uptrend, shares of THRM have been making mostly higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside in the near-term if THRM manages to take out Friday's intraday high of $44.80 to around $45.50 with high volume.
Traders should now look for long-biased trades in THRM as long as it's trending above Friday's intraday low of $42.06 or above more near-term support at $41.31 and then once it sustains a move or close above $44.80 to $45.50 with volume that hits near or above 643,726 shares. If that move kicks off soon, then THRM will set up to re-test or possibly take out its next major overhead resistance levels at $48 to its 52-week high at $49.23.